A U.S. District Court judge in Newark, N.J., has dismissed a suit that accused 6 carriers of illegally hiding compensation arrangements with brokers selling the carriers’ employee benefits products.
U.S. District Judge Garrett Brown Jr. ruled the insurers did not breach the Employee Retirement Income Security Act, as a group of employers had charged, because they were not plan fiduciaries under ERISA’s meaning of that term.
The employers charged that the insurers had conspired with benefits brokers to place business with employers in exchange for undisclosed fees and commissions.
In dismissing the class action against the carriers, Brown ruled that none of the carriers had a fiduciary duty connected with administering the employers’ benefit plans.
“Plaintiffs are unable to support their claim that defendants are fiduciaries with regard to administering employee benefits plans beyond claims administration,” Brown writes in his decision.
The plaintiffs have not shown how the defendants had actually harmed them by failing to disclose contingent commissions, Brown writes.
The defendants included companies (or units of companies) such as American International Group Inc., New York; CIGNA Corp., Philadelphia; Hartford Financial Services Group Inc., Hartford; MetLife Inc., New York; Prudential Financial Services Inc., Newark; and Unum, Chattanooga, Tenn.
Hartford is “pleased with the decision,” a spokesperson says.
Attorneys for the plaintiffs did not return calls seeking comment.
The case was In Re Employee Benefit Insurance Brokerage.